jctr.org.zm - Quarterly Bulletin; Bulletin 67

Zambia just graduated from the Heavily Indebted Poor Countries (HIPC) Initiative last year. This in monetary terms meant that Zambia got some debt relief, from US$ 7.1bn in 2002 to about half a million US$. What does this relief mean for the majority of ordinary citizens who prior to reaching the completion point were requested to tighten their belts, experiencing, for example, an uncompromising condition of non-recruitment of teachers? What measures is government putting in place to avoid another debt trap? Given Lubinda, a Member of Parliament of Kabwata Constituency in Lusaka, looks at loan contraction reforms that government should consider in regulating borrowing.

Having been a Member of Parliament for a Constituency within the City of Lusaka over the last six years before which I worked within the donor community for more than a decade and being closely associated with Civil Society Organisations including Jubilee-Zambia and the Jesuit Centre for Theological Reflection, I have seen first hand the dehumanising effects that debt has had on the poor in my country. I have suffered the pain of watching children die from malnourishment, from preventable diseases and without mother’s love. I have seen children grow without any education, I have watched children turning dungeons into their bedrooms and picking food from dustbins.

My life has been associated with wailing mothers, daughters and sisters burying the many people who go to their early graves due to lack of medical care, due to destitution and lack of jobs.

The majority of my fellow countrymen and women live from day to day without hope for a future - they have suffered the pangs of hunger, disease and ignorance for the more than five decades that my country has suffered the burden of debt.

Whereas my country’s economy grew at an average of 4% per year and saved in excess of 30% of Gross Domestic Product (GDP) from the Second World War to the early 1970’s, its fortunes turned around after the oil crisis and the stagnation of copper prices in the mid to the late 1970’s. Being a young country – having attained political independence only six years earlier, my government was in a hurry to educate its population and provide clinics, hospitals, infrastructure, safe drinking water and sanitation to its people. With a poorly performing economy due to the oil crisis and the low prices of copper, my country was forced into debt.

Whatever little development was being recorded by Zambia during this period was threatened to be reversed by the colonial regimes that dominated Southern Africa. It was therefore imperative for Zambia to support the liberation struggles in our sister countries like Angola, Mozambique, Namibia, Zimbabwe and South Africa. To do so my country again had to borrow from external sources, thereby more than doubling her debt burden.

The phenomenal growth of Zambia’s debt from US$ 3.2bn in 1980, to US$ 6.4bn in 1997 and finally US$ 7.1bn in 2002 was ironically due to accumulation of arrears which my country failed to honor because of foreign exchange difficulties.

As though they were a panacea to the unsustainable debt that my country and other poor countries had accumulated, creditor nations and the Bretton Woods Institutions imposed various conditions such as privatisation, wage freezes, downsizing of the civil service, introduction of user fees for primary health care and basic education, cancellation of government subsidies to water and sanitation and so on. As we have now come to acknowledge, the results of these formulations have been reduced productivity, increased joblessness, deepened poverty and even heavier debt. Under these circumstances, the attainment of the most important United Nations Millennium Development Goals (MDGs) by countries such as my own will be a far cry.

The bitter experiences of 1bn people in the world living under US$ 1 a day, where every three seconds a child dies from extreme poverty, and where 12m children have been orphaned by HIV and AIDS in Africa, must give us Parliamentarians the impetus to search for innovative ways of making debt work for the poor. We must be compelled to eradicate those conditions that make debt hurt the ones it is meant to serve.

As a Parliamentarian from a debtor nation, I am overjoyed by the initiative of Members of the United States Congress who are sponsoring the Jubilee Act for Responsible Lending and Expanded Debt Cancellation. During the Sabbath year, there cannot be a better strategy for development and global peace and justice than the cancellation of all bilateral and multilateral debt, the enactment and enforcement of laws that protect the poorest of the poor of the world from irresponsible lending, ensuring that all creditor nations and institutions contribute to preserving the gains of debt relief and protecting debtor nations against private investors who attempt to profit from trading in poor nations’ debts.

Zambia can well demonstrate that debt relief can reach the poor. The US$ 23.8m savings from debt relief for my country is going into agricultural projects, eliminating of school fees and user fees in rural health care centres and to infrastructure development.

On the other hand my country can also demonstrate that vulture funds can reverse these gains as we recently paid a colossal amount of US$ 15m to such a vulture fund in the name of Donegal.

For the noble intentions of the Jubilee Act to have meaningful effect, the other side of the equation ought to be put right and the Zambian Parliament is cognisant of the fact that our country too has to engage in responsible borrowing and responsible utilisation of borrowed and own resources.

To this effect, the Zambian Parliament over the last few years has been working on reforming the legal framework governing not only loan contraction processes, but also the management of the budget cycle.

Since 1969, the government of Zambia has had the freehand to contract external and internal debt without the approval of Parliament as long as it fell within the ceiling provided by Parliament. The Minister of Finance under the supervision of the President is empowered by the Loans and Guarantees (Authorisation) Act Chapter 366 to raise loans on behalf of the republic.

The loans so acquired are managed by the Ministry of Finance and the Bank of Zambia at the exclusion of Parliament. This has made monitoring of debt and following up on its utilisation very problematic.

Against this background, from 2001, Members of Parliament, particularly those in Reforms and Modernisation Committee, the Estimates of Budget Committee and the Committee on Economic Affairs which I am privileged to chair have been making frantic efforts to introduce the following pieces of legislation:

First, the Budget Act to provide for a transparent and participatory budget preparation process, the development of medium and long term development plans indicating corresponding sources of income and the submission to a relevant committee of Parliament by the Minister of Finance of anticipated revenues and expenditures for the year prior to the submission of the final estimates to Parliament.

Second, the Government Borrowing Act to provide for a transparent loan contraction process and to provide for Parliament to authorise any borrowing after considering the source of the loan, the extent of the total indebtedness by way of principal and interest, provisions made for repayment of the loan and its intended utilisation.

Third, Access to Information Act whose aim is to give every citizen the right to information held by the State and to compel the State to publicise any important information affecting the welfare of the Nation.

Fourth, the Code of Conduct of Public Officers legislation to cater for conflict of interest for public officers, and for declaration of incomes, assets and liabilities by specified public officers.

Fifth, the Budget Monitoring Framework to provide for the setting up of a unit involving civil society organisations and other interest groups to monitor the implementation of poverty reduction programs financed by the national budget.

We are encouraged by the many Civil Society Organisations that have rendered their guidance and support to Parliament on these and other matters that are aimed at ensuring responsible borrowing and prudent investment of national resources.

Jubilee-Zambia, the Jesuit Centre for Theological Reflection, the Civil Society for Poverty Reduction, Women for Change, and other organisations that have been part of the Debt Campaign since 1998 have been in forefront in pushing for such legal reforms. Happily their submissions to the ongoing Constitutional Review Process form part of the draft constitution which is to be considered over the next twelve months.

With the continued support of these and other like-minded organisations and the growing zeal of Parliamentarians, we are certain that we shall deliver the laws that will make irresponsible borrowing and abuse of national resources a thing of the past. We are determined to stop corruption and its associated vices of bribery, nepotism and plunder.

I appeal to all Parliamentarians globally to exert pressure on our governments to deliver on the United Nations Millennium Development Goals. In addition I urge Members of the United States Congress and the Senate to support the Jubilee Act on Responsible Borrowing and expanded debt cancellation.

I appeal to the people of United States of America to insist that the government of the USA takes the leading role in delivering on MDG #8 which calls for building a global partnership for development, addressing the needs of least developed countries, developing an open trading and financial system and dealing comprehensively with the debt of developing countries.

Editorial Note: This is an edited version of a paper presented to the Jubilee Prayer Breakfast, Rayburn House Office Building, Washington, DC, Tuesday, October 16 2007

Quarterly Bulletin

Bulletin 74 4th Quarter 2007

Bulletin 74
4th Quarter 2007